Big U.S. banks are benefiting from a strong rebound in trading activity; competitors that pulled back from trading may not be so lucky

A strong rebound in trading activity has boosted the results of three major U.S. banks. What matters to the battered banking industry is whether the shift is temporary or more permanent.

If the rebound proves lasting, big U.S. banks may be positioned to take market share from competitors, mostly Europeans, that have scaled back their trading businesses. Less capacity and competition could make for improved overall economics of the...